New USPS Memo: Gift Cards are Not Accepted to Buy Money Orders

Milesperday just posted a memo which was sent out (regionally?) indicating that prepaid gift debit cards are not a valid debit card to buy money orders at the USPS. The memo also states that it will be hard-coded soon into the registers not to accept prepaid cards for money orders.

The memo also gives tips to the cashiers so they can recognize someone who is using a gift card:

If a customer has a stack of debit cards, preloaded for $500 or $250 each, and they want to buy money orders with them, they are almost certainly not linked to the customer’s account.

Gift cards do not normally have the chip embedded in them.

Gift cards do not have the customer’s name on them.

Gift cards will of then say so on the front of the card.

For now, it could still be possible to buy money orders at USPS depending on the cashier, but keep this in mind before you load up on gift cards, and ensure you have a backup plan.

USPS money orders are the favored method of most heavy MSers for the past year or two. This is partially due to the fact that Walmart got more difficult to deal with, not all cards work anymore at Walmart, and additionally, Amex stopped allowing MS on Bluebird/Serve cards. Another factor is that at some point in the past few years the USPS system was updated and in the process began allowing many more prepaid debit cards as payment methods than had been previously allowed.

It wouldn’t be that profitable. I have a friend of a friend who is willing to run a few thousand of debit VGC a month in return for cash (from a business, basically converting cash sales into card sales with a net zero impact) and will charge 1.5%. The big players have signed these special deals for debit payments, but small businesses don’t have access to those.

Seriously, FUCK USPS. They benefit from these transactions. There is no actual fraud problem (this reminds me of “voter fraud” if anything). A number of smart savvy consumers are benefiting from a service USPS provides. As a result, they can’t stand that and are trying to kill it. Does every government (or… closely tied to government) organization want nothing but inconvenience and irritation from regular people?

It’s a combination of spite at savvy consumers and maybe pressure from banks. We are the citizens, not the banks. This sort of action is detestable.

While I don’t MS, it has always been hard for me to imagine this on a number of levels. For one thing, it’s the mere perception of fraud or suspicious activity that they or any other supplier/merchant is trying to avoid. You aren’t committing fraud but to anybody reviewing the activity, it’s an obvious red flag, just like buying the same amount over and over on an Amex card is a red flag for their RAT.

I personally would not be able to handle the anxiety of carrying around thousands of dollars in Visa/MC/Amex gift cards to liquidate, but that’s just me. We all have different risk tolerances. If just one of these $500 cards goes missing or doesn’t work, whether because of actual fraud by someone else, then your profit margin is gone just like that.

But if I’m somebody in risk management at the USPS, I would ban this stuff too. It’s definitely suspicious activity and as such can give auditors the perception of fraud and it’s not something anybody there wants to manage.

On top of this, I would never mess around with the USPS. I think it’s one thing to play games with Walmart or CVS but I wouldn’t want to make the USPS mad. I’ve read some bad stories about it and I wouldn’t want a government official at my door over…whatever.

I used to work at a bank. If you see something suspicious, that is out of the ordinary, it is supposed to get reported, if not to the government, to a bank official. MS methods are simply not normal, and unlinked debit cards represent risk to all involved parties. If done in volume, I can understand why the USPS doesn’t want to be part of that.

You are obviously not a “regular person”. There are certain regulations institutions dealing with money have to enforce. Don’t forget what MSers do is often what money launderers do as well, minus the legality and intent.

The $500 VGC churning will be over before too long. After that, you’ll be able to use your Chase Freedom and Ink 5% categories (maybe) and that will be it.

The PO has been hardcoded for Metas for about a year(?) now but Bancorp vanillas are still working. It’ll definitely arouse suspicion now if one does split payments of $500 each, one swipe of non Meta VGC may still work as long as the cashier does not ask to see the card.

bought 4 k at 2 different PO this AM. Used 8 OV cards. No problem. Upstate NY. Saw new software has been installed, but still worked fine. The clerks here never ask to see any card I use. Hope this update takes forever.

One thing I’ve absolutely never done is buy $3k of MO in a day from different POs to avoid filling out the form. It’s one thing to get shut down by AmEx or Chase; quite another to run afoul of the feds.

Bummer. Even with a friendly local USPS office, I am glad I decided to switch to bank account funding as my primary means of MS, strictly for sign-up bonuses. I’ve never been interested in MS beyond that.

Well I frequently fly economy and on occasion business on very long hauls. Most of my points come from CC sign ups and work purchases. Those first class flights are either memories or sales pitches of credit card selling blogs 😉

Well, as a MSer, I thought it was nuts too. But it’s legal, the banks didn’t object and willingly gave tens of millions of points and substantial cashback. It’s beyond laughable that banks incentivised sales and not profits, but that’s how their bonus pay/options were set up by their Boards. It was the more the merrier and who cares about shareholders? Who are we to criticize their decisions? Or worse yet, be stupid enough to fail to accept their largesse? About time some clued-in consumers were able to loss center. I get as much pleasure knowing I’m a huge loss center to some bank as I get from travel. 😉

I honestly think there is very little fraud in the giftcard to money order transaction because there should be a pretty clear paper trail from the fraudulent purchase to the deposit of the money order.

Therefore, I think it is simply a matter of the giftcard issuing banks losing money on the cards if they aren’t profiting from interchange fees from credit card transactions.

Then, the banks put pressure on the money order retailers using “fraud” as the reason they shouldn’t accept them.

The fraud doesn’t occur in the GC->MO step of the process, but rather the Stolen CC->VGC step. GC->MO is just a great way to turn the proceeds of fraud into cash, but GC->MO isn’t fraudulent in itself.

What I mean is that they should know which giftcards were purchased with the stolen credit card and then which money orders were purchased with the giftcards. Now, they just have to find where those particulat money orders are deposited or cashed to find the perpetrator.

This seems like too easy of a way to get caught to actually work for fraud.

I agree with the others who say fraud is just a smokescreen. The real issue is that the gift card sellers lose money if they are used to purchase money orders. As it is, they get 2% if used for spending, but only $.19 (I believe) if used in a PIN based debit transaction. Let’s use the below numbers as an example. If a grocery store can sell a $500 card for $505.95, and assuming they’re paying $10 in fees, that must mean that the grocery store is only paying $490 (at most) for it to be worthwhile. The issuer is getting the $5.95 activation fee + $10 in fees when spent, so the issuer is making a $5.95 profit. If the Issuer is only getting the $.19, they’re losing at least $4 per card. I suspect that they put pressure on Walmart and USPS. If anything, using cash to buy money orders would be more indicative of money laundering.

I tend to think it is the USPS which is now seeing increased volume in MO sales. Prior to MS the last time I bought a USPS MO was for eBay purchases in the pre-Paypal era. The MO fees are fine for smaller dollar amounts but may not be sufficient when people are doing $1000 ones.

I noticed new POS UI yesterday. But didn’t realize this could be the signal of a huge event like this. The POS actually got another update since May, if you know what I mean.

Now the real problem is how they interpret the word “soon”. If there is a clear timeline, at least we can act accordingly. Essentially, this “soon” word sounds like “immediately” to me, cause you never know when it will come.

If it is what it seems it might be, it’s bad. Very bad. And it won’t bring much joy to Ink Cash users. On the other hand, the memo carries a Visa card and I’ve been using MasterCards at USPS for the past year or so.

I don’t MS, but other than Square (which can run amok of their rules), MOs seem to be the best way to cash out these pesky rebate cards. You can buy store gift cards with them usually, but sometimes you just want the cash (especially if the card has hundreds of dollars on it and you don’t want to tie it up with one store).

wow, bad news for sure.
what these companies are going to realize soon though is that they may have killed off the churning of gift cards but their volumes are going to plunge. Then they’ll have to evaluate why they are even in the business. Who in their right mind on a regular basis buys a prepaid vgc/mc and pays over face value to do so ?? MS’ers help spread the cost of that business model, even though we might be loss leaders. Same exact thing as Staples selling copy paper at $0 after rebate, we help them justify truckload buys vs. smaller buys with higher wholesale prices.
They might help kill off unprofitable sales but all those rack keepers who restock the gift cards aren’t going to have much to do either.
Similar to ebay/PP not accepting ebay gift cards for gift cards / precious metals, I’m guessing ebay volumes have gone down dramatically. And now to get buyers interested, they offer their sellers huge concessions in precious metals that must be cutting into ebay profitability.
As for the poster above who dislikes MS, not sure why that is to be honest. If many areas of MS dry up, it is going to make a lot of other areas less attractive to do business in as well imo, that includes all the travel deals, along with signup bonuses.

It wouldn’t surprise me if USPS is cracking down bc of real money laundering. After all, gift cards can be purchased with cash, that can’t be traced, and theoretically, money orders could be treated slightly different than cash deposits since it’s a pseudo-check. It only takes a call from the FBI to ruin it for the rest of us buying MO legally.

In last 5 years of MS, only once saw someone buying gcs with cash – and was $100s for Xmas gifts. I’d be surprised if all sorts of alarm bells weren’t going off if someone was buying $500 gcs in volume with cash like we do with ccs.

This is likely coming from some useless minions in the bowels of laughably misnamed Homeland Security trying to justify their existence and deciding it’s money laundering in support of IS IS or some such hysterical nonsense.

Good point! Maybe less suspicion with debit? More likely some bad eggs are buying VGC with stolen CC actually. Or maybe it’s a simpler answer of USPS isn’t making money on MOs with VGC, especially when they’re doing 5x $200 VISA cards per MO. I think they pay a merchant fee per swipe. With one card, they make some money, but 5 over a $1.60 fee is probably unprofitable. At least with Walmart, they have a long-standing tradition of offering one-stop shopping, so if they’re losing a little bit of money on MO, they probably don’t care as much as they hope to sell other goods for the convenience of having everything. I admit that I often just do my shopping there when I need a few things and have MO to buy.

When one door opens, another opens.
Here’s my MSing history.
First I found Amazon Payments. I MSed $1k/month.
Then I found Red Card. I MSed $5k/month but only got 1x.
Then I found Serve. I MSed $5k/month but mostly on 5x categories.
Then I found MO’s. I upped my MSing to $10-20k/month.
Here’s to brighter futures!

you’ll be surprised how many people have turned to the PO since a lot of “birds” died. Either they have no WM, MS unfriendly WM, grocery stores in their area accept only cash for MO or USPS is their only option to buy MOs. I guess the sudden surge in MO purchases by the thousands may have triggered this policy. On FT, there are those saying they buy $10K of MOs on a daily basis because they can; I am not surprised the postmaster general finally took notice.

Until it is hard coded for a $50 investment off eby you could always start cloning the gift cards to a bank issued Debit card with your name on it. I am not sure on the legalities but if you own both cards I don’t see how it could be an issue. Most of us probably have a stack of old cards from the accounts we have churned.

I can see why USPS would do this. If they see a spike in MO using GC’s, that is just a matter of time to have some news outlet reporting along the lines of saying ‘US Govt encourages money laundering’ (even though it is not for those with MS intent). The money they earn with the fees vs the bad publicity/headache isn’t worthwhile for a govt agency. I might be wrong, but that is just my thought about this.

On a lighter note: All MS/churners should unite and form a legal company and accept members for a annual fee (to pay for the existence) and allow legal MS and penalize member folks for not churning (have a anti-RAT team) :).. At the end, all loop-holes will dry up and we will be left with nothing (imagine Mad Max:Fury Road with MS folks).

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